er than in any other region. 14 Also, the trade volume of rice was up 67.5 percent in the decade between 1993-1995 and 2003-2005, while cotton increased by 48.8 percent, fresh and chilled vegetables by 69.7 percent, and cut flowers by 72.9 percent during the same period. 15 Nevertheless, such price increases do not cover all commodities and their real magnitude has been diminished by exchange rate movements, especially the US dollar. Furthermore, while markets are likely to remain buoyant in the medium term, the secular trend of declining real commodity prices may eventually reassert itself. Price movements, moreover, are not the only disadvantage for countries specialized in com- modities, since commodity production is not associated with the technological exter- nalities and ‘learning by doing’ which characterizes much of manufacturing and the technology oriented service industries. The challenge for these countries is to sustain or accelerate their growth momentum over the coming years by gaining ground in more knowledge based activities whilst simultaneously upgrading the quality of their commodity production. 16 Furthermore, LDCs, more than other developing countries, are affected by chal- lenges associated with the specialization in extractive industries, and are negatively affected by the phasing out of preferences on textiles and clothing. 17 While the EU has essentially compensated both African and Asian LDCs for phasing out market access preferences in textiles through the introduction of wider GSP preferences (i.e. EBA), the United States has compensated only African LDCs for phasing out (i.e. AGOA). Market access to the United States has thus eroded for many Asian LDCs, especially in textiles and clothing. This affects some of the largest exporters of textiles and clothing amongst the LDCs. 18 Bangladesh’s RMG exports account for 76 percent of total export earnings; the United States is the destination of 42 per cent of RMG, yet clothing is excluded from the GSP. Furthermore, Nepal is deprived from the US DFQF treatment of apparel, which is a major export product. 19 The future of trade policy: from trade-led development to development-led trade Though the relationship between trade and development is the subject of contentious debate in the literature, there is little doubt that trade can be a powerful source of economic growth. International trade can expand markets, facilitate competition and disseminate knowledge which can catalyze economic growth and human develop- ment. Trade can also raise productivity and increase exposure to new technologies, which can also drive growth. However, none of this is automatic or inevitable. 20 Chapter 2. Globalization and the Least Developed Countries: Issues in trade and investment 49 _______________________ 14. UNCTAD, 2005. 15. UNDP, UNCTAD, ACP and CFC, 2007. 16. Global Initiative on Commodities, 2007. 17. UNCTAD, 2004, pages 230-239. 18. UNCTAD, 2004, page 232. 19. UNDP Bangladesh Country Office and UNDP Nepal Country Office. 20. UNDP, 2003, page 21. Much policy advice in the 1990s advanced the argument that trade liberalization ‘as such’ is the engine of economic growth and that it is also a driving force for pover- ty reduction. 21 As a result, many developing countries and development partners have focused on trade liberalization. However, the trade integration policies of most LDCs have been characterized by two types of problems: (1) the projected trade expansion is delinked from the prescribed trade policies, and (2) the prescribed trade policies are characterized by a very narrow focus. At the international level, trade policies focus on the benefits of further trade liberaliza- tion, while at the national level they concentrate on the benefits of building trade capacity. However, as shown, the experience of LDCs has belied the belief that trade liberalization automatically promotes growth and alleviates poverty. According to UNCTAD, available evidence shows that trade liberalization has so far not been closely associated with poverty reduction. 22 Poverty appears to be increasing in the LDCs with both open and closed trade regimes. Between these extremes, poverty increased less in countries that have pursued moderate trade liberalization. While this does not imply that trade liberalization increases poverty, it does show that liberalization has not helped reduce poverty. On the other hand, the LDCs that experienced economic growth in the 1990s became more export oriented. However, increased export orientation was not necessarily associated with growth, as ‘GDP per capita declined or stag- nated in eight of the 22 LDCs with increasing export orien- tation between 1987 and 1999; and in 10 of these countries poverty actually increased’. 23 A key lesson, therefore, is that increased exports alone do not result in poverty reduction. In this context, sustained economic growth and institutional innovations, many requiring policy space, have been crucial to ensuring sustainable economic and human development for LDCs. 24 Overestimating the benefits of further liberalization Sustained economic growth can be accelerated by increasing both imports and exports; however, since there is no automatic relationship between growth in trade and poverty reduction, whether and to what extent this happens will depend on 50 Making Globalization Work for the Least Developed Countries _______________________ 21. Sachs and Warner, 1995; Dollar and Kraay, 2000. 22. UNCTAD, 2002, Ch.3. Among the LDCs, trade varies greatly and depends on whether their main exports are primary products, non-oil primary products, or manufactured goods. Primary products exporters exhibit the highest poverty levels. More than 80 percent of the people in mineral-exporting countries lived on less than $1 a day at the end of the 1990s, compared with 43 percent in service exporting LDCs and 25 percent in manufactured goods exporting LDCs (excluding Bangladesh) (UNCTAD, 2002, page 115; UNDP, 2003). 23. UNDP, 2003, page 34. 24. Sustained economic growth in 14 LDCs with rising GDP per capita led to a fall in poverty in these coun- tries between 1987 and 1999 (UNDP, 2003, page 34). … [I]ncreased exports alone do not result in poverty reduction … [S]ustained economic growth and institutional innovations, many requiring policy space, have been crucial to ensuring sustainable economic and human development for LDCs. household choices and broader government policies and spending. At present, it appears that the benefits that LDCs may derive from further multilateral trade liber- alization are likely to be overestimated and are actually rather small, because today, most LDCs have very open trade regimes. LDCs will therefore derive relatively small benefits from a reduction of their own tariffs. Furthermore, LDCs benefit from many tariff-related market access preferences. They will therefore also gain relatively little from further tariff reductions by developed countries. LDCs could, however, derive relatively high gains from (1) better market access to the more industrialized devel- oping countries, (2) the reduction of non-tariff barriers in developed countries, and (3) from a less restricted movement of people. For instance, in 2005, official remit- tance inflows were approximately four times higher than net aid flows and nine times higher than FDI in Bangladesh. 25 Currently, however, multilateral trade negotiations under the Doha Round do not promise meaningful progress in these areas. The need for international support At the international level, it is necessary to look beyond further trade liberalization and prioritize the strengthening of LDC export performance. Three types of policy measures are particularly important in this respect: 26 • Generally applicable support which should focus on all developing countries and would (1) help countries cope with commodity price instability and decline, and (2) help them address challenges associated with the management of min- eral resources and mineral revenues. Specific measures under the former could include the establishment of an export diversification fund, strengthening the capacity of developing country financial institutions to provide credit to small producers and small and medium enterprises, and the creation of regulatory environments enabling national stakeholders to use modern finance and risk management instruments. 27 • LDC-specific support measures which should focus on (1) strengthening S&DT provisions, (2) strengthening market access preferences, and (3) introducing supply-side support measures. The policy instrument of market access prefer- ences will inevitably erode, and it is therefore necessary to design new instru- ments to stimulate exports. But, while market access preferences continue to have bite, it is essential to make the best possible use of them. To this end, mar- ket access preferences should not be undermined by the exclusion of sensitive products, the escalation of tariffs, overly complex ROO, or overly stringent prod- uct standards in developed countries. For instance, despite promising signs for the export of agro-based products such as tea and herbal and aromatic plants, Nepal has not been able to exploit international Chapter 2. Globalization and the Least Developed Countries: Issues in trade and investment 51 _______________________ 25. UNDP Bangladesh Country Office. 26. UNCTAD, 2004, pages 239-263. 27. Global Initiative on Commodities, 2007. market access opportunities due to strict technical requirements. 28 Market access pref- erences should provide complete DFQF access for all products for the LDCs, and they should be granted on a mandatory basis by all developed countries and more industri- alized developing countries. The introduction of EPAs between the EU and many LDCs does not promise to improve market access preferences. An enticing feature of these arrangements is that LDCs are promised aid for the strengthening of trade capacities. Nevertheless, another feature of the arrangements is that many LDCs will need to com- ply with relatively stringent IPR and investment regulations, which go beyond current regulations in the multilateral trading system, and will effectively set a minimum standard for future multilateral trade negotiations. • South–South cooperation. South–South trade has signif- icantly increased and many developing countries have benefited. But LDCs, which are marginalized in North–South trade, are also increasingly marginalized in South–South trade. While the share of LDC imports that originate in other developing countries has significantly increased, the reverse is not true. Instead, other devel- oping countries today import a smaller share from LDCs than they did in the early 1980s. To counteract these developments it is necessary that the more industrialized developing countries open their markets to exports from LDCs. In this context, an important instrument that countries should make more use of is the Global System of Trade Preferences among Developing Countries. National level priorities Today, the focus on trade liberalization at the international level is accompanied by a focus on trade capacity building at the national level. Efforts to strengthen trade capacities typically help countries implement appropriate trade policies and regula- tions, and/or help producers comply with product standards. There is also an increas- ing recognition of the need to develop transport-related infrastructure such as roads and storage facilities as part of the current priority being placed on Aid for Trade. The development of appropriate transport infrastructure is a particularly great challenge for LLDCs. For instance, difficult routes both internally and through Tanzania and Kenya further slow down and restrict Rwanda’s access to markets. 29 The landlocked status of Malawi is a major handicap for its highly competitive sugar industry. 30 But, while all of this is important, none of it is sufficient. The weak export performance of LDCs is not related only to trade barriers at the international level, nor only to their inability to ship products. It is more fundamentally related to their inability to com- pete internationally in terms of product prices and quality. In order to support the 52 Making Globalization Work for the Least Developed Countries _______________________ 28. UNDP Nepal Country Office. 29. UNDP Rwanda Country Office. 30. UNDP Malawi Country Office. … [I]t is insufficient to focus on a narrow concep- tion of supply capacities. Instead, there is a need to broaden the focus to address productive capacities more generally. efforts of LDCs to increase their world exports, it is insufficient to focus on a narrow conception of supply capacities. Instead, there is a need to broaden the focus to address productive capacities more generally, to complement the analytical shift from trade-led development to development-led trade. Current trade strategies comprise a prominent part of development strategies. While it may be an exaggeration to suggest that trade strategies have replaced devel- opment and PRSPs, trade strategies have certainly conditioned these strategies in an increasing number of countries. A more balanced relationship between trade and development will require a shift from trade-led development strategies — which assume positive effects of further trade liberalization on growth and poverty reduc- tion — to development-led trade strategies, which instead focus on the ways in which the development of productive capacities can contribute to sustained eco- nomic growth with poverty reduction, with increased trade as a valuable instrument of development, but not an objective in itself. During the past decades, many LDCs have been unable to effectively increase their exports. This shows that market access opportunities are distinct from market entry requirements. Although market access can be improved, and many market access pref- erences should be significantly strengthened, LDCs already benefit from market access preferences to many developed countries. But, so far, only a few of them have been able to effectively use such preferences. The ability of LDCs to do so does not only depend on an improvement of supply capacities, in the narrow sense, but on an improvement of productive capacities in the broadest sense. In particular, the development of productive capacities will require an expansion, and a better utilization, of the following three factors: 31 • Productive resources. These refer to the factors of production, which include human, physical, financial and natural capital. • Entrepreneurial capabilities. These are essentially the core competencies and technological capabilities that entrepreneurs ought to have in order to effec- tively use productive resources to convert raw inputs into internationally com- petitive outputs. • Production linkages. These refer to backward and forward, and horizontal and vertical linkages between small and large enterprises, informal and formal enterprises, and domestic and foreign enterprises. They also include various linkages between the informal and formal sectors and the agricultural and non- agricultural sectors. Productive capacities are closely associated with three economic processes, namely, the process of capital accumulation, 32 the process of technological progress, 33 and the process of favourable structural change, characterized by an Chapter 2. Globalization and the Least Developed Countries: Issues in trade and investment 53 _______________________ 31. UNCTAD, 2006, pages 59-81. 32. Akyuz and Gore, 1996. 33. Knell, 2006. increasing specialization in high-value-added activities and an increasing number of productive employment opportunities. 34 On the one hand, productive capacities influ- ence these three economic processes, but on the other, productive capacities are also influenced by these economic processes. However, this potentially beneficial relation- ship in LDCs is constrained by three factors—an underdeveloped infrastructure, weak institutions, 35 and weak external and domestic demand. 36 It is therefore necessary to overcome these three constraints in order to develop productive capacities. Real investment: From supply capacities to productive capacities A key implication of the analysis above is that LDCs need to increase their investment in the development of productive capacities (namely productive resources, entrepreneurial capabilities and production linkages), and related resources, especially infrastructure and institutions. Only then will they benefit from a more favourable process of capital accumula- tion, technological progress and structural change. The necessary investments to develop productive capacities and to relieve constraints on them are a formidable challenge for any country, but especially LDCs, which are resource- stripped economies. It is important to emphasize that these investments go beyond the current investment focuses of many countries. Investment in entrepreneurial capabilities goes well beyond the current focus on universal primary education (it should include investment in technical and vocational training, secondary and tertiary education, research and development and extension schemes); investment in institutions goes well beyond an exclusive focus on anti-corruption measures and a favourable investment climate (it should also include the development of effective busi- ness support institutions and banks); and investment in physical infrastructure should go beyond current efforts to close the digital divide (it must include large investments in electricity grids and transport networks). According to World Bank estimates, LDCs require infrastructure investment equivalent to about 7 percent of their GDP annually. 37 External resources for development financing The significant resource needs of LDCs cannot be covered by their domestically avail- able resources in the near future. This resource gap can only be financed by external 54 Making Globalization Work for the Least Developed Countries _______________________ 34. UNCTAD, 2006, pages 85-189. 35. Kozul-Wright, 2000. 36. UNCTAD, 2006, pages 193-280. 37. Briceno-Garmendia, Estache and Shafik, 2004. LDCs need to increase their investment in the development of productive capacities (namely productive resources, entrepreneurial capabilities and production linkages), and related resources, especially infrastructure and institutions. resources, especially ODA, but also FDI. Between 1999 and 2003, net FDI inflows to LDCs were about 2.6 percent of GDP, while in 2004 net ODA disbursements to LDCs were about 9 percent of GDP. These figures indicate that the LDC group has benefited from rising FDI and ODA inflows during the past few years. Nevertheless, many LDCs have been excluded because FDI is highly concentrated in a few countries (namely countries that benefit from oil, metals and minerals) and a few sectors (namely extractive industries). Moreover, ODA is also concentrated in selected countries (especially conflict affected countries), and a few areas (namely the social sectors, emergency assistance and debt relief). In order to finance the investment necessary in LDCs it is essential that: • Aid is further increased. In order for aid to play a more effective role in making progress towards the MDGs, the commitments to increase aid must be met. In 2005, G8 summit leaders agreed to increase aid to developing countries by $50 billion a year by 2010, with at least $25 billion a year going to Africa. A few months earlier, member states of the EU resolved to reach the internationally agreed target of 0.7 percent of GNI in ODA by 2015, with an interim target of reaching 0.51 percent by 2010. Donors should meet their stat- ed commitments, in a manner that channels real additional resources to develop- ment. An increase in the effectiveness of aid will also depend on the untying of aid and the further exploring of opportunities for OECD countries to provide addi- tional resources beyond those freed through debt cancellation, new innovative sources of finance (such as the IFFIm, the ATLs for drugs facilities, and Advance Market Commitments for vaccine investments). Attention should also be directed to the growing volume of aid provided by emerging economies, and measures that ensure ownership should be reinforced. 38 • There should be a better balance between the productive and social sectors. Much more aid needs to be committed to the development of infrastructure and the productive sectors than has been the case in past years. Between 1992 and 1994, and 2002 and 2004, the share of ODA from OECD/DAC countries to LDCs committed to social sector development, emergency assistance and debt relief increased from 35 percent to 62 percent. By contrast, over the same period, the share committed to infrastructure development and the productive sectors decreased from 48 percent to 24 percent. • Aid should be more effectively deployed. In order to strengthen the develop- ment effectiveness of aid, it is important for donors to achieve greater policy coherence. For example, it is necessary that trade policies that protect the agricultural sector in developed countries do not undermine aid policies that Chapter 2. Globalization and the Least Developed Countries: Issues in trade and investment 55 _______________________ 38. UNDP Senegal Country Office and UNDP Mauritania Country Office. Much more aid needs to be committed to the development of infra- structure and the produc- tive sectors than has been the case in past years. promote rural and agricultural development in developing countries. Furthermore, donors must achieve greater coherence in their reporting proce- dures, and both donors and recipient countries should use aid in a more trans- parent and accountable manner. With agreement in principle on the Paris Declaration, the OECD countries have already begun reforms in this area based on the principles of harmonization, alignment, ownership and mutual respon- sibility. 39 The speedy and comprehensive implementation of the Paris Declara- tion is necessary for an increase of aid effectiveness and it can promote progress towards development objectives, including the MDGs. Finally, aid given for military purpos- es should not be included in ODA. Such an inclusion could be a fatal mistake since it will serve to undermine the development orientation of ODA. Domestic resources for development financing Although LDCs have limited domestic resources and will continue to depend on high levels of aid, they can and should raise additional domestic resources to complement aid inflows, through an improved tax collection system. Furthermore, they have an opportunity to make more resources available for private investment through an improved banking system. Banks are more important than financial markets for credit provision at low levels of development. The weak- ness of the banking sector in LDCs is highlighted by the fact that in 2003, money supply was 80 percent of GDP in other, more industrialized developing countries, but just 31 percent of GDP in LDCs; and between 1980 and 2003, the share of domestic credit to the private sector dou- bled from 30 percent to almost 60 percent for low- and middle-income countries, but stagnated at around 14–15 percent in LDCs. 40 Contrary to common perception, the problem in LDCs is not so much that banks do not have the liquidity to make loans; it is rather that potential borrowers do not have the collateral that banks require. In Senegal, for example, 80 percent of loan applications by small- and medium-sized enterprises were rejected because of lack of collateral. 41 Lending by microfinance institutions does not effectively compensate for the lack of activity by commercial banks, or the weakness of many national development banks. This is because microfinance institutions typically provide relatively small credit volumes at relatively high interest rates for relatively short durations, whereas real-sector investments require relatively large credit volumes at relatively low inter- est rates for relatively long durations. In order to ensure that the domestic private sector, especially small and medium sized enterprises, have access to loanable funds 56 Making Globalization Work for the Least Developed Countries _______________________ 39. UNDP Mauritania Country Office. 40. UNCTAD, 2006, pages 230-246. 41. IMF, 2005. … [T]he creation of productive employment opportunities is the only proven sustainable, long- term measure to reduce poverty … Accordingly, this paper argues for a production oriented approach to poverty reduction in LDCs. and are able to conduct necessary investment, it is essential that commercial banks as well as development banks become more effective in fulfilling their core functions. Emphasizing a production-oriented approach to development Poverty reduction may be achieved through either the creation of productive employ- ment opportunities for the poor or through different types of transfer payments in cash (e.g., payment of welfare) or in kind (e.g., provision of complimentary social services) to the poor. While these two approaches to poverty reduction might be con- sidered contradictory, they are in fact complementary. However, the creation of pro- ductive employment opportunities is the only proven sustainable, long-term measure to reduce poverty, even though the provision of transfer payments is an important short-term measure to alleviate poverty. Despite this, and while both approaches are important, the latter approach has gained dominance in recent years. The under- standable desire for quick results has encouraged developing countries and their development partners to focus more and more on ‘high-impact actions’, which are associated with transfer payments. Today, poverty reduction efforts are mostly associ- ated with the provision of social services, mainly basic health and education. While the provision of social services is important for short-term poverty alleviation, it cannot by itself help to ensure long-term, sustainable poverty reduction. Moreover, if donors decrease their aid for social services, many poor countries will find themselves unable to provide these services to the poor. The only way for LDCs to decrease their high and sustained dependence on aid money, and to invest in their social sectors in the long run in a sustainable manner, is for them to promote high and sustained rates of eco- nomic growth and employment. While economic growth is not the ultimate objective of development, it is a necessary means. It is necessary (although not sufficient) for government revenues and essential government expenditures to increase. Furthermore, it is necessary (although not always sufficient) for the creation of productive employment opportu- nities and an increase in household incomes. Accordingly, this paper has argued for a production oriented approach to poverty reduction in LDCs. The development of enhanced productive capacities should assume centre stage in national develop- ment and poverty reduction strategies. It should also be a key concern of internation- al development assistance. Chapter 2. Globalization and the Least Developed Countries: Issues in trade and investment 57 References Akyuz, Y., and C.C. Gore. 1996. ‘The Investment Profit Nexus in East Asian Industrializa- tion’. World Development 24 (3): 461-470. Briceno-Garmendia, C., A. Estache, and N. Shafik. 2004. ‘Infrastructure Services in Devel- oping Countries: Access, Quality, Costs and Policy Reforms’. World Bank Policy Research Working Paper 3468. Washington, D.C. Dollar, David, and Aart Kraay. 2000. ‘Trade, Growth and Poverty, Policy Research’. Work- ing Paper 2615. World Bank. Washington, D.C. Global Initiative on Commodities, Outcome Document, Brasilia, May 7-11, 2007. Helleiner, Gerald. 1994. Trade Policy and Industrialization in Turbulent Times, New York: Routledge. ________. 2000. Tenth Raul Prebisch Lecture. UNCTAD. ‘Markets, Politics and the Global Economy: Can the Global Economy be Civilized?’ 2000. Geneva. IMF. 2005. ‘Senegal: Financial Stability Assessment Update’. IMF Country Report No. 05/126. Washington, D.C. Karshenas, M. 2001. ‘Measurement and Nature of Absolute Poverty in Least Devel- oped Countries’. Background paper to The Least Developed Countries Report 2002. UNCTAD. Geneva. Knell, M. 2006. ‘Uneven Technological Accumulation and Growth in the Least Devel- oped Countries’. Background paper to The Least Developed Countries Report 2006. UNCTAD. Geneva. Kozul-Wright, Z. 2000. ‘The Firm in the Innovation Process’. In Singer et al. (eds). Tech- nological Diffusion in Third World. New Delhi. Rodriguez, Francisco, and Dani Rodrik. 2001. ‘Trade Policy and Economic Growth: A Skeptic’s Guide to Cross-National Literature.’ In Ben Bernanke and Kenneth Rogoff (eds.), National Bureau for Economic Research Macro Annual 2000. Cambridge, Massa- chusetts: MIT Press. Sachs, Jeffrey, and Andrew Warner. 1995. ‘Economic Reform and the Process of Global Integration’. Brookings Paper on Economic Activity 1: 1-118, Brookings Institution. Washington, D.C. UNCTAD. 2002. The Least Developed Countries Report 2002: Escaping the Poverty Trap. Geneva and New York. 58 Making Globalization Work for the Least Developed Countries [...]... enhanced institutional support measures are needed to build the productive capacities of LDCs needed to engage productively in the process of globalization Chapter 3 Globalization and the Least Developed Countries: Issues in technology 64 Making Globalization Work for the Least Developed Countries Introduction T his paper considers the importance of technological progress for economic growth and sustainable... UNDP et al 2003 Making Global Trade Work for People London and Sterling, Virginia: Earthscan UNDP, UNCTAD, ACP and CFC 2007 ‘Open Editorial on The Commodity Problematique, “If you will not pay us reasonable prices for our exports, we will export ourselves”’ World Bank 2002 Globalization, Growth and Poverty’ Policy Research Report Oxford 59 60 Making Globalization Work for the Least Developed Countries... Aid for Trade led initiatives, notably poor infrastructure, low levels of education and skills, poor technological base, weak export institutional frameworks, lack of effective market access and cumbersome customs procedures 61 62 Making Globalization Work for the Least Developed Countries 11 Participants felt that trade and investment are critical elements to promote sustainable growth Both are mutually...Chapter 2 Globalization and the Least Developed Countries: Issues in trade and investment 20 04 The Least Developed Countries Report 20 04: Linking International Trade with Poverty Reduction Geneva and New York 2005 Trade and Development Report 2005 New York and Geneva 2006 The Least Developed Countries Report 2006: Developing Productive Capacities Geneva and New York UNDP et al 2003 Making. .. This round table addressed the topic Globalization and the Least Developed Countries: Issues in Trade and Investment’ The panel was chaired by H E Ms Sahana Pradhan, Minister of Foreign Affairs of Nepal Kamal Malhotra, Senior Adviser and Cluster Leader, Inclusive Globalization, Poverty Group, Bureau for Development Policy, UNDP, was the presenter of the issues paper Globalization and the Least Developed... for export development but is also vital for domestic production for local markets As most LDCs have undertaken _ 1 This issues paper was prepared for the UN Ministerial Conference Making Globalization Work for the LDCs’, Istanbul (Turkey) 9-11 July, 2007, by the Division for Africa, Least Developed Countries and Special Programmes (ALDC), United Nations Conference on Trade and Development... infrastructure, structural handicaps such as geography and Chapter 2 Globalization and the Least Developed Countries: Issues in trade and investment climate, commodity dependence and lack of value addition of export products, limited access to international markets, low levels of human, physical and technological capital, migration of skilled workers, the dominance of the informal sector, weak institutions,... oriented approach to poverty reduction in the LDCs if commonly shared objectives are to be achieved 4 Most participants agreed to the major recommendations stated in the issues paper Participants emphasized the importance of integrating LDCs into the world economy Trade and investment are important movers of globalization, and LDCs can benefit from both if properly addressed 5 Many participants noted that... investment’ It was noted that the paper is a collaborative effort of UNCTAD and UNDP The paper was presented on behalf of the two agencies 2 The key messages of the presentation highlighted that while globalization has been associated with rising world income, the benefits among countries have been unequal, and LDCs, despite significant trade liberalization and economic reforms, have often been marginalized... attention should be given to enhanced S&DT and DFQF access for all LDC products in the markets of developed countries 7 It was emphasized that regional integration is essential to maximizing the benefits of globalization for LDCs Regional integration has the potential to attract investment flows, expand market size and develop regional infrastructure and connectivity, especially in the case of LLDCs 8 Participants . undertaken 64 Making Globalization Work for the Least Developed Countries _______________________ 1. This issues paper was prepared for the UN Ministerial Conference Making Globalization Work for. to loanable funds 56 Making Globalization Work for the Least Developed Countries _______________________ 39. UNDP Mauritania Country Office. 40 . UNCTAD, 2006, pages 230- 246 . 41 . IMF, 2005. … [T]he. Poverty Trap. Geneva and New York. 58 Making Globalization Work for the Least Developed Countries ________. 20 04. The Least Developed Countries Report 20 04: Linking International Trade with Poverty